“There was an issue out there,” he added, “and it should have been dealt with more broadly.”
In notes written by Diamond and released Tuesday evening, Barclays also disclosed a conversation between Diamond and the Bank of England’s deputy governor, Paul Tucker, that took place in October 2008. Tucker is said to have called Diamond to pass on the concerns of top British government officials over Barclays’s seemingly high Libor rates at the time, suggesting that such elevated levels did not need to be as “high” as they were.
Diamond said Wednesday that he never viewed the conversation with Tucker as a “directive” to artificially lower rates. Rather, he saw it as Tucker flagging the rising political concerns over Barclays’s solvency only two days before it closed a major deal for new private equity. Diamond said his notes on that conversation, passed down to another senior official at the bank, were later misinterpreted to mean that British officials were effectively ordering Barclays to artificially lower its reported lending rates.
The Bank of England has denied knowledge of rate manipulation. On Wednesday, the bank said Tucker — the man widely expected to be the bank’s next governor — would soon appear before the committee to give his own account. A spokesman at the Financial Services Authority who declined to be named, citing the British banking regulator’s policy, declined to comment. But the spokesman cited the agency’s official report on Barclays, which suggests the bank was never explicit about its allegations that other banks were lying about their rates while attempting to mask its own misconduct.
The Fed on Wednesday said it had no immediate comment.
The 2008 period during which Diamond said regulators looked the other way is largely separate from the heart of the wrongdoing at Barclays or the manipulation of the lending rate between 2005 and 2007 that was orchestrated by a group of traders to elevate their bonuses. The numbers reported by that group were among those used to calculate the daily Libor rate, which influences the rates paid by millions of credit card and mortgage holders, affecting about $350 trillion worth of loans.
British politicians questioned Diamond’s assertion that the bank had acted as quickly as possible to investigate and contain the damage once it was uncovered. Given news reports in 2008 that suggested ongoing manipulation of Libor rates and Diamond’s own assertions that other banks were engaging in misconduct, they chided him for not digging deeper into his own organization to establish the truth.
John Mann, a lawmaker from the opposition Labor Party, pointed out to Diamond that the Quakers who found Barclays had done so with the motto “honesty, integrity and plain dealing.” He then offered to have that statement tattooed on Diamond’s knuckles.
“You’re in charge,” Mann said. “People were suggesting impropriety. And you did not investigate it. Either you were complicit or you were grossly negligent or you were grossly incompetent.”
Craig Timberg in Washington contributed to this report.